· 2 min read · Features

Are gig economy workers employees?

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The gig economy is rising up the agenda, but do employers understand the legal implications?

Terms such as gig economy and Uber model are liberally used these days to describe where new technologies are being applied to existing sectors, thus disrupting them. Supply chains are often shortened, middle men and women are cut out. The labour and skills required by the business are often engaged in new ways.

But do employers or workers understand the legal implications in terms of the employment law rights and obligations these new working models might afford?

UK legislation does not define 'employment status' but relies on a framework of potential indicators, developed from case law, to identify when it arises. As a result, determining who is and who isn't an employee is not always clear-cut.

For an individual to be an employee in the eyes of the law, they must work under a contract of service or apprenticeship – whether express or implied. What differentiates the former from any other working arrangement is the presence of three essential elements:

1. An obligation on the parties to respectively provide and undertake work – referred to as 'mutuality of obligation'

2. Personal performance of the relevant services

3. A sufficient degree of control by those considered to be the 'employer' in terms of how and when services are carried out, which deprives the individual of real autonomy

The absence of any one of these elements is fatal to employment status. Importantly, however, even where all three are present the legal analysis does not end there. To qualify as 'employment' the working arrangement in question must also be consistent with such a relationship, based on an overall assessment of the parties’ intentions and the reality of their working arrangements.

It is perhaps this that poses the greatest challenge of all to applying the founding legal principles of employment status to the modern workplace. In a working culture that is drifting towards more casual engagements, the traditional characteristics from which the legal principles of 'employment' emanated (such as prolonged periods of commitment, continuity, exclusivity, and so on) are increasingly distorted.

This has even led some to suggest the law requires significant overhaul, having failed to keep up with technological advances or evolution of working patterns. Calls for change include introducing a definition of 'employment status' and broadening and simplifying its application.

Successive governments have contemplated reform in this area, but ultimately shied away from it. If proposals emerge any time soon the size of the task should not be under-estimated.

There is no easy nor quick fix, not least because of the tricky task of devising sufficiently clear and definitive wording. In contrast to law based on evolving cases, introducing a statutory definition of 'employment' could also prove a somewhat inflexible instrument. For the foreseeable future, therefore, legal change appears unlikely and will continue to be something that evolves organically as new situations arise.

Simon Rice-Birchall is partner at Eversheds Human Resource Practice Group